Demote, Defang DeMarco

This guy, Edward DeMarco, is deliberately damaging America -- promoting foreclosures, high unemployment and excessive taxes.

This guy, the acting head of the Federal Housing Finance Agency (FHFA), has aggressively denied help to eviction-imperiled homeowners.

And now he's threatening [1] to prevent towns from implementing their own plans to rescue underwater homeowners -- those with mortgages exceeding their home values.

This guy, Edward DeMarco, has got to go. He's a George W. Bush administration holdover and is only by default running the agency that regulates Fannie Mae and Freddie Mac, the nation's mortgage financing giants. Handed the chance to help homeowners, as well as taxpayers, the economy and Fannie and Freddie, urged by President Obama and Treasury Secretary Timothy Geithner to seize that opportunity, DeMarco yelled, "NO, NO, NO, NO." So he's just gotta go.

There's some technical glitch [2] with outright firing this bureaucrat even though he is defying the President of the United States. Fine. Demote him. Install him in a sub-basement office somewhere. And disarm him; defang him; disqualify him from wielding power to hurt America.

Here's what DeMarco refuses to do: He won't allow Fannie and Freddie to reduce the principal owed by underwater, foreclosure-threatened mortgage holders. He is denying them the help, even though a study [3] by his own agency says this:

• It would cost Fannie and Freddie $3.6 billion less than its current efforts to help homeowners.


• It would save taxpayers $1 billion.


• It could help as many as 500,000 homeowners.

In addition, another study [4], "The Win/Win Solution: How Fixing The Housing Crisis Will Create One Million Jobs," found that a larger principal reduction program would save each underwater mortgage holder more than $500 a month. That money, spent by all those homeowners in their hometowns, would create a million jobs.

It would act as a stimulus to the economy -- one that would cost taxpayers nothing. They have everything to gain, and bankers and Fannie and Freddie have nothing to lose.

In fact, banks are doing it. Principal reduction now accounts for nearly 40 percent [5] of all bank mortgage modifications. Banks are reducing principal because it can be cheaper than foreclosure. And the rate of re-default is lower than it is for other kinds of mortgage modification.

The FHFA study found that even if the Treasury Department gave money to Fannie and Freddie to help with principal reduction, taxpayers would ultimately save $1 billion.

The Treasury money would come [3] from the Troubled Asset Relief Program (TARP) =- the one Bush created to bail out the banks. There could be no more appropriate use of that money than aiding homeowners who are unemployed, underwater and threatened with foreclosure because reckless banksters gambled with the economy and lost.

But one bureaucrat, one loyal Republican who doesn't want an improving economy to threaten Mitt Romney's election, one obstructionist callous to suffering Americans is forbidding Fannie and Freddie from establishing principal reduction programs.

DeMarco doesn't believe his own agency's study. He claims less than $1 billion will be saved. Not enough for him. He'd rather not [6] do it if it saves taxpayers only $500 million.

Also, DeMarco contends he is very worried about moral hazard [6] -- about rewarding people who might manipulate the system to get a principal reduction. DeMarco would rather squelch the program for everyone than countenance cheating by one homeowner.

The program is intended to help only underwater homeowners who already are behind on mortgage payments. It's possible that some people whose mortgages are underwater but who have incomes sufficient to make the payments would deliberately fall behind in an attempt to qualify.

They'd be placing themselves in significant jeopardy if they did. That's because an investigator may deny their application for principal reduction after determining that their income remains sufficient to cover mortgage payments. And at that point, they'd have damaged their credit rating by deliberately defaulting on their loan.

It's worth risking some small amount of cheating for $1 billion in savings to taxpayers and a massive free stimulus to the economy. It's worth it to rescue hundreds of thousands of struggling homeowners threatened with foreclosure. It's worth it to salvage communities spiraling down because of neighborhoods deteriorating from a multitude of vacant foreclosed houses and homes posted with eviction notices.

Just this week, DeMarco attempted to unilaterally expand his power and authority by threatening [7] to take action against communities that are considering using eminent domain to seize underwater mortgages and reduce the principal owed. In these places, like San Bernardino County, Calif., as many as half of mortgage holders are underwater. DeMarco said no. No help for besieged towns. No help for besieged homeowners who, through no fault of their own, lost home value and jobs. DeMarco rules.

Earlier in his reign, DeMarco blocked homeowners and communities from using a federal program called PACE established by Congress to ease the purchase of energy-saving household projects such as rooftop solar panels.

Like the principal reduction program, PACE would have put money in homeowners' pockets and created jobs. The money would come from lowered energy bills and the jobs from additional orders at manufacturers of energy-saving devices.

But Emperor DeMarco said no. This guy has got to go. Senate Republicans blocked [8] President Obama's choice to replace DeMarco. So it's time for the President to make a recess appointment to head FHFA and demote this guy DeMarco who is poisoning the economy and underwater homeowners.